Mayor and businesses endorse calls for greater London fiscal autonomy

Ministers are facing renewed calls to grant City Hall and London’s councils greater control over the tax revenue raised within the capital’s borders.

London’s local and regional governments are currently reliant on central government in Westminster for the majority of their funding and lack many of the powers needed to push through large projects necessary to deliver the infrastructure needed to support the city’s booming population.

Schemes such as the Crossrail link require ministerial and parliamentary approval and well as Treasury backing before they can proceed. London’s first mayor, Ken Livingstone, spent much of his first term having to make the case for the project to a succession of ministers.

His successors, Boris Johnson and Sadiq Khan, have subsequently found themselves having to try and persuade ministers of the merits of the Crossrail 2 scheme which has cross-party support within the capital and would deliver much needed extra capacity on the transport network.

In 2013, Mr Johnson convened the London Finance Commission to look at how the city could gain greater autonomy without harming the rest of the country. The commission’s subsequent report proposed the devolution of a suite of property taxes which would be offset by a reduction in the level of central government grant received by towns halls and City Hall.

Although the report was widely welcomed, including by other English cities seeking to negotiate devolution settlements, few of the recommendations have been taken up by ministers.

However since last year’s vote to leave the European Union, minsters have spoken of a desire to ensure that some of the powers and spending control being repatriated from Brussels are devolved down to the regions and nations.

In the wake of the referendum result, Mayor Khan reconvened the commission and asked it to consider how London could benefit and prepare itself for the challenges which lay ahead.

Today an updated report was published calling on ministers to consider devolving air passenger duty in London, handing control of the new apprenticeship levy to London’s government to fund skills programmes and consider assigning a proportion of London businesses’ VAT yield to councils and City Hall.

The report also reinforces the commission’s 2013 calls that the full suite of property taxes – including council tax and business rates – be devolved to London’s government.

Speaking at the report’s launch, Commission chair Professor Tony Travers (pictured) said that whatever reasons people voted for Brexit, few of them were likely to have wanted Westminster to wield even greater centralised control.

He added: “At present, the centralised nature of UK government makes it virtually impossible for the Mayor and the boroughs to bring about the required structural change to address the types of inequalities Londoners face, from housing to household income.

“This report makes the case for a much more ambitious devolutionary settlement for London.

“It argues that by giving London government greater power over the tax base and public services, the city’s leaders would be provided with stronger incentives to develop its economy and opportunities to reform public services.”

Today’s report has been welcomed by Mayor Khan who said: “London has the same population as Wales, Scotland and Northern Ireland combined, but we have far less control over how our economy and public services are run.

“Giving London more control would allow us to manage the current economic uncertainty in the aftermath of the EU referendum, giving London the stronger voice it needs so we can protect jobs, growth and prosperity for the future.”

Local boroughs have also welcomed the report with the chair of London Councils, Cllr Claire Kober, saying: “The Mayor and boroughs must be given new powers if we are to realise economic growth in London and the UK and prepare for the huge challenges that lie ahead.

“This is critical to being able to deliver the jobs, homes and transport that Londoners need.”

Business leaders and professional bodies have also endorsed the report.

Colin Stanbridge, Chief Executive of London Chamber of Commerce and Industry, said: “London is forecast to achieve megacity status by 2030 with over 10million citizens. To cater for that, retaining more London generated taxes and securing new competencies is be key.

“London currently has to endure Whitehall centralisation to deliver the projects that will keep the capital competitive in a post Brexit world. To counter that, move with pace and service the London of tomorrow, more power and responsibility needs to be devolved to City Hall.”

Suzanne Moroney, London Director at the Institution of Civil Engineers, commented: “We welcome the findings of the London Finance Commission as a positive step towards London taking greater control of its own destiny.

“As a city with a population of more than 8 million, London should have the ability to make its own decisions, fund its own infrastructure improvements and decide how it should develop into the future.”